Northwest Arkansas Regional Airp ort is the primary airport serving the communities of Fayetteville, Springdale, Rogers and

Bentonville. Fayetteville is home to the University of Arkansas; Donald W. Reynolds Razorback Staium is pictured above.



### Du n & Brad street DUNS Number : 03

- 810

- 6196 Tax Identification Number: 71

- 0702376 Two Digit Congres sional District Code: 03

June 11, 2012 

# Northwest Arkansas Regional Airport Authority

Bentonville , Arkansas

Proposal under the Small Community Air Service Development Program

Docket DOT

- OST

- 2012

- 0069Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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- 2012

- 0069 2 

## TABLE OF CONTENTS

INTRODUCTORY LETTER

................................ ................................ ................................ .................... 3
EXECUTIVE SUMMARY

................................ ................................ ................................ ........................ 4
AIR SERVICE OVERVIEW

................................ ................................ ................................ ..................... 5 Catchment Area and Alternate Airports

................................ ................................ ................................ ................. 5 Existing Air Service

................................ ................................ ................................ ................................ ................ 6 Air Service Development Efforts

................................ ................................ ................................ ............................ 7 

### AIR SERVCE DEVELOPMEN T NEEDS AND DEFICIENCIES

................................ ............................... 9 Capacity Trends

................................ ................................ ................................ ................................ ..................... 9
Traffic Trends

................................ ................................ ................................ ................................ ....................... 11 Leakage to Other Airports in the Region

................................ ................................ ................................ .............. 13
Domestic Fare Trends

................................ ................................ ................................ ................................ .......... 15 Domestic Fares Versus Domestic Fares at Other Airports in the Lower 48 United States

................................ . 17 Domestic Fares Versus Other Airports in the Region

................................ ................................ .......................... 19 

### STRATEGIC PLAN

................................ ................................ ................................ .............................. 20
Revenue Guarantee for Low

- Cost Carrier Service

................................ ................................ .............................. 20
Goals

................................ ................................ ................................ ................................ ................................ .... 20 Grant Amendments/Alternate Strategies

................................ ................................ ................................ ............. 21 

### PROJECT IMPLEMENTATION, MONITORING AND FUNDING

................................ .......................... 21 Public / Private Partnerships

................................ ................................ ................................ ................................ 21 Project Funding

................................ ................................ ................................ ................................ .................... 22 Proposed Implementation Timeline

................................ ................................ ................................ ..................... 23 

### PROJECT MONITORING AND FINANCIAL CONTROL

................................ ................................ ...... 24
Success Metrics

................................ ................................ ................................ ................................ ................... 24 Legal Sponsor

................................ ................................ ................................ ................................ ...................... 24
Financial Controls

................................ ................................ ................................ ................................ ................ 25 

### A PPENDIX A: REQUIRED SUMMARY INFORMATION

................................ ................................ ..... 26Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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### INTRODUCTORY LETTERNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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- 2012

- 0069 4 

### EXECUTIVE SUMMARY

Northwest Arkansas Regional Airport is proposing a Small Community Air Service Development Grant in the amount of $1, 000,000 to supplement a community

- based cash contribution of $1 00,000
, airport cash funding of $ 200,000
, community in

- kind contributions of $ 50,000 and airport in

- kind incentives valued at $ 625,052 to provide a minimum revenue guarantee for service at Northwest Arkansas Regional Airport by a low

- cost carrier.

The average domestic fare at Northwest A rkansas Regional Airport was among the highest of all airports in the Lower 48 United States , but the average domestic fare is especially high among Northwest Arkansas Regional Airport's peer group airports

– airports generating at least 100,000 domestic o rigin and destination passengers in 2011. Although Allegiant Air serves Northwest Arkansas, the service is limited to less

- than

- daily point

- to

- point service to Las Vegas, Los Angeles and Orlando/Sanford . Although Allegiant's fares are lower than the fare s offered by the network carriers to these destinations, Allegiant's service does not provide for connections beyond the destinations, and Allegiant's pricing in Northwest Arkansas does not have a competitve impact on the pricing strategies of American, De lta, United or US Airways at Northwest Arkansas.

The communities served by Northw est Arkansas Regional Airport are relatively isolated , with the closest low

- cost
carrier service available in Tulsa and Little Rock (and to a lessor extent at Branson) . The network carriers serving
Northwest Arkansas do not price fares based on fares at either Tulsa or Litt le Rock, where pricing by both Southwest and Frontier is matched by th e network carriers at these airports.

In 2011, ex

- Allegiant airline capacity at Nor thwest Arkansas Regional Airport was down 25.6% since it peaked in 2005, and ex

- Allegiant traffic was down 17.9% since it peaked in 2006. Even when the impact of Allegiant is considered, capacity is down 22.8% since 2005 , and domestic traffic is down 7.6% since 2006

. Based on a leakage study completed in June 2011, slightly more than one

- fifth of the traffic generated in the primary catchment area of Northwest Arkansas Regional Airport is lost to other airports in the region, with the airport in Tulsa capt uring approximately 12% of the traffic and the airport in Little Rock capturing 6% of the traffic.

Service by a low

- cost carrier with a network of destination s beyond the hub or focus city the carrier would serve nonstop from Northwest Arkansas, would like ly generate a competitive pricing response from the four network carriers serving Northwest Arkansas and result in lower fares in the competitive markets.Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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### AIR SERVICE OVERVIEW

Catchment Area and Alternate Airports

The Fayetteville

- Springdale

- Rogers Met ropolitan Statistical Area is considered as the primary catchment area for Northwest Arkansas Regional Airport, where most of the airport's traffic either originates or is destined, but the airport also draws some traffic from more rural areas in Arkansas, Missouri and Oklahoma. The July 1, 2011
, Census Bureau population estimate of the Fayetteville

- Springdale

- Rogers metropolitan statistical area was 473,830 residents; the population of the metropolitan statistical area grew 35.5% since 2000 from 349,562

r esidents.

Other airports with commercial airline service in the region are located in Tulsa, Little Rock, Fort Smith, Springfield, Joplin, and Branson. The airport in Joplin is the closest airport to Northwest Arkansas at 74 miles; the airport in Little Rock is the furthest at 218 miles.

Exhibit 1: 60

- and 120

- Minute Drive T imes from Northwest Arkansas Regional Airport and the Location of Alternate Airports in the RegionNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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### Existi ng Air Service

Northwest Arkansas is served by five airlines

– American, D elta, United, US Airways and Allegiant

-- to 16 nonstop destinations. With th e exception of Allegiant's three destinations, all of Northwest Arkansas' service is to major airline hubs or focus cities where connections can be made to other destinations in the airline network s

. Also with the exception of the Allegiant service, none of the so

- called low

- cost carriers, including Southwest (or
AirTr an), JetBlue, Frontier, Spirit or Virgin America , serve Northwest Arkansas. Although Allegiant off ers low
fares to Las Vegas, Los Angeles and Orlando/ Sanford, Allegi ant's service does not provide connections to a larger network of cities as the other low

- cost carriers typically offer via connections at their hubs or focus cities.

Exhibit 2 : Current Routes Operated by Carrier from Northwest Arkansas Regional Airport

The number of departures per day, average seats per departure and seats per day by market and by carrier scheduled in August 2012 are displayed in Exhibit 3

. With 42.7 % of total capacity, American oper ates more capacity at Northwest Arkansas than any ot her carrier. Delta operates 26.5% of the capacity, United is the third largest carrier in terms of capacity, with 16.2%, and US Airways operates 7.9% of the capacity. Collectively,Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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- 0069 7 American and Delta co ntrol more than two

- thirds of the airport's total capacity, and the four network carriers operate 93.4% of the total capacity at the airport. Allegiant's less

- than

- daily service to Las Vegas, Los Angeles
and Orlando /Sanford generates just 6.6% of the tota l capacity, although Alleg iant's capacity can vary lower or higher depending on the time of year.

Exhibit 3 : Departures per Day *
, Seats per Depart ure and Seats pe r Day by Market and Carrier at Northwest Arkansas

– August 2012 (OAG Data as of May 23, 2012)

* T he number of departures per day is displayed in increments of sevenths (because there are seven days in a week) . "1 5/7" is read as one flight seven days a week with a second flight operated five of the seven days in a week.



### Air Service Developme nt Efforts

Although Northwest Arkansas Regional Airport has relatively good service ope rated by the four network carriers serving the market to major hubs and focus cities , there is no low

- cost carrier service at the airport and virtually no pricing compe tition among the net work carriers serving Northwest Arkansas . The first priority of the airport and the community is
, therefore
, to obtain service on a low

- cost carrier, but the airport is taking a two

- prongedNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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- 2012

- 0069 8 approach by aggressively pursuing both servic e from a low

- cost carrier and service from incumbent airlines to
destination s not currently served by the network carriers. Airport management has met with both low

- cost carriers and network carriers over the past 12 months to discus s the performance of e xisting service at Northwest
Arkansas and potential new service from the network carriers and new service from low cost carriers. These discussions have helped shape the strategy to develop Northwest Arkansas Regional Airport's air service development obj ectives. The basic message communicated from the network carriers regarding their pricing strategies in the market is they charge what they believe the market will bear and they are satisfied with current levels of profitability. The low

- cost carriers be lieve traffic could be stimulated with lower fares, but their level of confidence in the market would increase if the airport and community could provide a revenue guarantee.Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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### AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES

Capacit y Trend s

Northwest Arkan sas' total capacity (to include network carriers and Allegiant) , measured in terms of seats per d ay each way, is down 22.8 % since 2005

. Also since 2005, Northwest Arkansas has l ost slightly more than one

fourth or 25.6 % of its ex
- Allegiant capacity

. The ex
- Allegiant capacity reduction is the result of discontinued service to Los Angeles, St. Louis, Miami, Raleigh/Durham and Salt Lake City, substitutions of regional jets for mainline equipment in markets such as Chicago and Memphis and combinations of fewe r frequencies and/or the use of smaller regional jet aircraft in markets served from Northwest Arkansas. With the exception of Allegiant's
limited less

- than

- daily service to Las Vegas, Los Angeles and Orlando/Sanford beginning in 2009 , Northwest
Arkansas has never be en served by a low

- cost carrier, and Allegiant provides only point

- to

- point service to the
three destin ations it serves from Northwest Arkansas.

Exhibit 4 : Seats per Day Ea ch Way at Northwest Arkansas Regional Airport (Ex

- Allegiant and Allegia nt ) Year

- End Fourth Quarter 2002

- 2011 (DOT T

- 100 data)

T his Section Continued on Next PageNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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- 0069 10 Exhibit 5 illustrates that American, Delta and United/Continental ha ve reduced capacity at Northwest Arkansas
since 2005

. American 's capacity is down 30.3%, De lta's capacity is down 33.3%, and the combined capacity of United and Continental is down 4.8%. The capa city of US Airways is up 7.9%

.

Exhibit 5 : Seats per Day E ach W ay by Carrier at Northwest Arkansas Regional Airport

– Year

- End Fourth Quarter 2002

- 2011 (DOT T

- 100 data)

T his Section Continued on Next PageNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### Traffic Trend

s

While Northwest Arkansas' capacity peaked in 2005, traffic peaked in 2006 at approximately 1,091,000 annual origin and destination (O&D) passengers. Since the peak in 2006, total traffic is down 5.4%, but the decline in total traffic is masked by Allegiant entering the market in 2009 and international traffic increasing 22.8%.
Domestic ex

- Allegiant traffic, which generated approximately 80% the total traffic in 2011 at Northwest A rkansas
, is down 17.9% since 2006.

Exhibit 6 : Annual D omestic and International Origin and Destination (O&D) Passengers at Northwest Arkansas Regional Airport Year

- End Fourth Quarter 2002

- 2011 ( DB1B data)

T his Section Continued on Next PageNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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- 0069 12 When Nort hwest Arkansas' annual O&D data is translated to passengers pe r day each way (PDEW), ex
- Allegiant
domestic traffic is down 247 PDEW from 1,382 PDEW in 2006 to 1,135 PDEW in 2011 ; international traffic is up
25 PDEW from 112 PDEW in 2006 to 137 PDEW in 2011
, Allegiant generated 142 PDEW in 2011 (versus none in 2006), and total traffic is down 80 PDEW from 1,494 PDEW in 2006 to 1,414 PDEW in 2011.

Exhibit 7 : Annual Domestic and International Passengers per Day Each Way (PDEW) at Northwest Arkansas Region al Airport Year

- End Fourth Quarter 2002

- 2011 (DB1B data)Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### Leakage to Other Airports in the Region

Despite having no airport within a two hour drive of Northwest Arkansas Regional Airport with low

- cost carrier service, a leakage study of 2010 traffic completely in June 2011 revealed slightly more than 20% of the traffic generated within the primary catchment area of the Northwest Arkansas Regional Airport is lost to other airports in the region. The airport in Tulsa captured 12.4% of the traffic, and the airport in Little Rock captured 5.7% of the traffic generated in the catchment area of Northwest Arkansas Regional A irport (the remaining traffic was lost to the airports in Fort Smith, Springfield, Branson and Joplin).

Exhibit 8 : Airport Origin for Northwest Arkansas Catchment Area Traffic January 2010

– December 2010 (June 2011 Leakage Study Data )

The high perce ntage of traffic leaked to the airports in Tulsa and Little Rock is not surpris ing given the hi gh fares at Northwest Arkansas Regional A i rport, the lack of low

- cost carrier service at the airport, and the service by Southwest in Tulsa and Southwest and Frontier in Little Rock. Based on the data collected in the June 2011 leakage study, the average fare (domestic and international) paid at Northwest Arkansas was $259 each wayNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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- 0069 14 versus $191 at Tulsa and $202 at Little Rock. The fare paid by travelers using Northwest Arkansas was 35.6% higher versus Tulsa and 28.2% higher versus the average fare paid at Little Rock.

Exhibit 9 : A verage Fare Pa id by Northwest Arkansas Catchment Area Passengers by Originating Airport

– January 2010 through December 2010 (June 2011 Leakage Study Data)Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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### D omestic Fare Trend

s

As airlines have cut capacity in Northwest Arkansas since 2005, fares have increased. S ince Northwest
Arkansas' capacit y peaked in 2005 at 2,752 seats per day each way, the average domestic fare for all domestic
traffic , including Allegiant traffic, increased $67 each way or 36.4% to $250 each way. This increase came as
Northwest Arkansas' capacity f ell 22.8% and traffic fell 7.5 %.

Exhibit 10 : Passengers per Day Each Way (PDEW), Seats per Day Each Way and Average Domestic One

- Way Fare at Northwest Arkansas Regional Airport

– Year

- End Fourth Quarter 2002

- 2011 (DOT T

- 100 and DB1B D ata

– All C arriers )

T his Section Continued on Next PageNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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- 0069 16 While the average domestic fare for all carriers serving Northwest Arkansas increased 36.4 % from $183 to $250
since 2005 , the difference in the domestic far e increase is even more profound when the Allegian t fare data is segregated from ex
- Allegiant domestic fare data. When the Allegiant data is excluded, the average fare
increased $86 or 47.2 % from $183 to $269 each way, exclusive of any taxes or fees.

Exhibit 11 : Average One

- Way Domestic Fare at Northwes t Arkansas Regional Airport

– Year

- End Fourth Quarter 2002

- 2011 (DOT DB1B data)Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### Domestic Fares Versus Domestic Fares at Other Airports in the Lower 48 United States

The average domestic fare at the average Lower 48 airport in 2011 was $171 in 2011. T he average domestic
fare at Northwest Arkansas Regional Airport is significantly higher than t he average domestic fare at most other Lower 48 airports in the United States. In 2011, the average domestic fare at Northwest Arkansas for all carriers was $25 0 and $269 when Allegiant fares are excluded. The average fare of $25 0 at Northwest Arkansas (to include Allegiant) was 46. 4 % higher, and the average fare of $26 9 at Northwest Arkansas (to exclude Allegiant)
was 57.7 % higher than the average fare at the a verage Lower 48 airport in 2011.

Exhibit 12 : Average Domestic Fare at Northwest Arkansas Versus the Average Lower 48 Airport

– Year

- End Fourth Quarter 2002

- 2011 (DB1B data)

T his Section Continued on Next PageNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT

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- 0069 18 Not only did Northwest Arkansas have high fares relative to the average Lower 48 airport, the average domestic fare of $250 at Northwest Arkansas
, to include Allegiant data, ranked as the 1 1th highest fare among all lower 48 airports with at least 100,000 origin and destination passengers in 2011.

While N orthwest Arkansas Regional Airport generated the 11th highest domestic fare among Lower 48 airports with at least 100,000 origin and destination passengers in 2011 when Allegiant data is included , the airport's domestic fare of $269 ranks as t he 6th highest domestic fare when Allegiant data is excluded . Only Minot, Columbus (Georgia), Bismarck, Idaho Falls and LaCrosse generated a higher average domestic ex

- Allegiant fare
than Northwest Arkansas in 2011.

Exhibit 13 : Origin and Destination Pa ssengers, Passengers per Day Each Way (PDEW) and Average Domestic Fare at the 25 Highest Fare Airports with at Least 100,000 Domestic O&D Passengers in 2011 (DB1B data)Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### Domestic Far

e s Versus Other Airports in the Region

As illustrated in Exhibit s 12 and 13, Northwest Arkansas' domestic fares are high relative to the average Lower 48 airport, but the fares are also high relative to the other airports in the region both when the impact of Allegiant is included in fare calculations and when Allegiant's i mpact is not included. The average domestic fare in 2011 for all carriers for Northwest Arkansas, Fort Smith, Springfield, Joplin, Tulsa, Little Rock and Branson was $198 compared to the average fare of $250 in Northwest Arkansas. While $198 was the aver age domestic fare for all airports and carriers in the region, the average domestic fare s at Tulsa and Little Rock were even lower, with Tulsa at $188 and Little Rock at $186.
The new airport in Branson has also begun to emerge as a viable option for low

- cost service for travelers in
Northwest Arkansas. Although it is located 97 miles from Northwest Arkansas Regional Airport, and the drive time is over two hours, affordable fares are available on low

- cost carriers at Branson. Both AirTran and Frontier

a re low

- cost carriers serving Branson. The av erage domestic fare at Branson in 2011 was just $130.

Exhibit 14 : Average Domestic Fare at Northwest Arkansas Regional Airport Versus Other Airports in the Region

– Y ear
- End Fourth Quarter 2000

- 2011 ( DB1B data)Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### STRATEGIC PLAN

Revenue Guarantee for Low

- Cost Carrier Service

N orthwest Arkansas Regional Airport believes the most effective and efficient way to reduce fares, increase traffic and reduce the number of passengers leaking to other airports is to re cruit a low

- cost carrier to the community. While Northwest Arkansas has service to multiple network carrier hubs and focus cities , the network carriers are not competing on price, and the network carriers have not demonstrated a willingness to stimulate t raffic at Northwest Arkansas Regional Airport with lower fare structures. Service by a low

- cost carrier in Northwest Arkansas would effectively force the network carriers to match the fare structure of the low

- cost carrier resulting in
more traffic and a reversal in fare trends.

In today's environment, low

- cost carriers generally require a community to share the risk of new service by providing incentives such as low long

- term airport operating costs, waived fees for a minimum of two years, and
revenue gua r antees of varying amounts. A ir service development is becoming increasingly competitive among airports as fewer airlines and relatively flat airline industry capacity growth has caused most airports in the United States to understand the nee d for low ope rating costs and implement incentive programs offering waived fees as incentives for new and/or expanded airline capacity . The playing field for waived fees is now essentially level, and all airports serious about developing and enhancing their air servi ce offer waived fee incentives satisfactory to most airlines. The ability for airports and communities to offer funds to support a minimum revenue guarantee is not as widespread simply because raising the amount of funding required to meet an airline's m inimum revenue guarantee threshold can be daunting. Airports and communities that have both incentives of waived fees and minimum revenue guarantee funding have a tremendous advantage over airports and communities without minimum revenue guarantee funding

.


### Goals

Northwest Arkansas Regional Airport has three goals for the proposed project to recruit a low

- cost carrier to the community.

 Lower fares to both the nonstop market and the connecting markets served by the low

- cost carrier.

 Reverse the decline in Northwest Arkansas' origin and destination traffic.

 Recapture catchment area traffic leaked to other airports.Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### Grant Amendments/

Alternate Strategies

Northwest Arkansas Regional Airport's primary air service development goal is to attract a low

- cost carri er to

serve the Northwest Arkansas market. If the Department awards Northwest Arkansas Regional Airport a grant for the proposed low

- cost carrier service, but the community is not successful in recruiting a low

- cost carrier to operate at Northwest Arkansa s Regional Airport , the airport and the community may request the Department
consider redirect ing award funding to assist in recruiting other service

.

In addition to a lack of low

- cost carrier service, the airport and the community have also identified hubs and focus cities without service from Northwest Arkansas that have been targeted for network carrier service by the carriers currently serving Northwest Arkansas. The combinations of destinations and carriers include Los Angeles on American, United or Delta; San Francisco on United; Salt Lake City on Delta; Phoenix on US Airways; Miami on American; Washington Dulles on United; Philadelphia on US Airways and New York JFK on Delta.



### PROJECT IMPLEMENTATION, MONITORING AND FUNDING
Public / Private Partner ships

The airport, l ocal governments and business organizations in the region understand the importance of affordable air fares, and the relationship between air fare affordability and economic growth. Based on this recognition and awareness, the three g roups meet on a regular basis to discuss potential solutions to the unreasonably high fares charged by the carriers currently providing service in Northwest Arkansas. Including the Airport Authority, there are ten agencies and organizations partnering to improve air service in Northwest Arkansas.

 Northwest Arkansas Regional Airport Authority

 Arkansas Economic Development Commission

 Bentonville

- Bella Vista Chamber of Commerce

 Fayetteville Chamber of Commerce

 Rogers

- Lowell Area Chamber of Commerce

 Siloam Sp rings Chamber of Commerce

 Springdale Chamber of Commerce

 Regional Chamber of Commerce

 Eureka Springs Chamber of Commerce

 Northwest Arkansas CouncilNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### Project Funding

In addition to the Small Community Air Servi ce Deve lopment Grant of $1,0 00,000 requested from the Department, organizations in the community are willing to prov ide cash of $ 100,000 and in

- kind funding valued at $50,000 for local media company advertising placement . The a irport will provide cash of $200,000 for marketing
and estimates the val ue of its in

- kind contributions from waive d fees at $625,052 over the two

- year life of the project . The total value of cash and in

- kind contributions from the community and the airport is valued at $975,052 or 49.4 % of the total project cost of $1,975,05 2

.

Exhibit 15 : Summary of Sources and Types of Project FundingNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### Proposed Implementation Timeline

The proposed implementation timeline for the project assumes the Department will award Small Communit y Gra nt Funding sometime in July or August 2012 . O nce the award is announced
, Northwest Arkansas Regional Airport
wi ll advise airlines of the grant award . Based on airline planning lead times and the need for ad vance bookings,
we assume no airline would begin service until sometime in 2013 , and we have c onservatively assumed the

se rvice could not begin until September 2013 . The first two milestones on the Airport's timel ine are to execute the grant agree ment with the Department and to negotiate the minimum revenue guarantee agreement with the
airline . O nce service is announced and schedules are published, the airline
, the Airport and the community would begin marketing the n ew route and working with the airline to monitor advance bookings. The Airport will continue its marketing pro gram and continue to work with the airline to monitor the route once service begins. The Airport
will submit grant status reports on a quarterly basis to the Department throughout the proposed two

- year term of the minimum revenue guarantee.

Exhibit 16 : Proposed Project Timel ineNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### PROJECT MONITORING AND FINANCIAL CONTROL
Success Metrics

The ultimate s u ccess of th e progra m will be based on the community's ability to attract a low

- cost airline to serve the community, a subsequent decline in fares in the markets served by the airline, an increase in traffic at the airport and a reduction in the amount of total traffic generated in the primary catchment area leaking to other airports in the region. The Airport will continuously moni tor the performance of the new service . Even before service begins , we will communicate with the airline on a weekly basis to monitor advance bookings and week

over
- week a dvance bookings. Marketing and promotional activities can be adjusted if advance bookings are weak or are not booking at a rate s atisfactory to the airline.

Exhibit 17 : Project Goals and Success Metrics

Project Goals Success Metric

 Lower fares to both the nonstop market and the connecting markets served by the low

cost carrier.  Quarterly year

- over
- year declines in fares for the
m arkets served by the carrier.

 Reverse the decline in Northwest Arkansas' origin and destination traffic

.  Increased quarterly year

- over
- year origin and destination traffic

.
 Recapture catchment area traffic leaked to other airports

.  Less leakage to Tulsa a nd Little Rock.

Once service begins, the Airport will rely on traffic and revenue data provided directly by the airline and the amount of reimbursements requested by the airline as indications of project success. T

- 100 data and DB1B data
will also be an alyzed to compare year

- over
- year market size growth on a quarterly basis. In addition, the airport will analyze leakage once the service has operated for a full year to determine the trend in leakage to other airports. The Airport will report its success metrics in the quarterly grant reports to the Department.


### Legal Sponsor

The Northwest Arkansas Regional Airport Authority is the legal sponsor responsible for administering the program, and the Northwest Arkansas Regional Airport Authority is a governmen t entity.

Northwest Arkansas Regional Airport Authority Kelly L. Johnson Airport Director Northwest Arkansas Regional Airport Alice L. Walton Terminal Building One Airport Blvd. Suite 100 Bentonville, AR 72712 479

- 790

- 1000Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### Financial Controls

As the spons or, Northwest Arkansas Regional Airport Authority and its governing body, Northwest Arkansas Regional Airport Authority Board , will be the responsible partie s for all fiscal matters and the Department's reporti ng requirements. The Airport Authority Board is established as a public governing body. As a public entity
, the Department can be assured that proper financial controls are in place to guarantee that the Department ’s Grant will be used in accordance with any subsequent agreement. The Northwest Arka nsas Regional Airport Authority Board understands that the Grant is a reimbursable grant, meaning the Airport is responsible for program expenditures and will submit invoices to the Department for reimbursement, based on a percentage of the total grant req uest.Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### APPENDIX A: REQUIRED SUMMARY INFORMATION

A. Applicant Information

Not a Consortium

Interstate Consortium

Intrastate Consortium
Community now receives EAS subsidy
Community (or Consortium member) previously received a Small Community Grant
If previous recipient: Date of Grant: ____________________ Expiration Date of Grant: ____________________



### B. Public/Private Partnerships

Public

1. Northwest Arkansas Regional Airport Authority 2. Arkansas Economic Development Commission 3. Bentonville

- Bella Vista Chamber of Commerce 4. Fayetteville Chamber of Commerce 5. Rogers

- Lowell Area Chamber of Commerce 6. Siloam Springs Chamber of Commerce 7. Springdale Chamber of Comme rce 8. Regional Chamber of Commerce 9. Eureka Springs Chamber of Commerce 10. Northwest Arkansas CouncilNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### C. Project Proposal

Marketing Upgrade Aircraft New Route Travel Bank Service Restoration Subsidy Surface Transportation Regional Service Revenue Guarantee Launch New Carrier Start

- up Cost Offset First Service Study S ecure Additional Service Other (explain below)

_______________________________________________________________________________________

__________ _____________________________________________________________________________ 

### D. Existing Landing Aids at Local Airport

Full ILS Outer/Middle Marker Published Instrument Approach Localizer Other (specify)



### E. Project CostNorthwest Arkansas Regional Airport Authority; Bentonville, Arkansas

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### F. In

- Kind Contributions**

For funds in lines 5 a (Air port In

- Kind contribution) and 5 b (Other In

- Kind contribution), please describe the source(s) of fund(s) for each.
(5a) Northwest Arkansas Regional Airport will waive landing fees and terminal rent for the first two years of service by a low

- cost carrier. The value of landing fees assumes two daily flights operated with a 737

- 300 or similar size aircraft and is based on th e signatory landing fee of $1.89 per 1,000 pounds. (5b) Community

based in

- kind contribution, valued at $50,000 over the two

- year life of the project, is for placement of marketing and advertising.



### G

. Is this application subject to review by state un der Executive Order 12372 Process?

a. This application was made available to the State under the Executive Order 12372 Process for review on (date):
b. Program is subject to E.O. 12372, but has not been selected b y the State for review.
c. Program is not covered by E.O. 12372



### H

. Is this applicant delinquent on any federal debt?

No
Yes (explain)